What are the Different Types of Auto Insurance?

  • Auto Insurance

The auto insurance industry in Ontario is very strictly regulated by FSCO. It is mandatory for a motorist to drive with active car insurance with at least the standard level of coverage. If you are involved in an accident while driving without insurance then that is a serious concern. As per the laws in Ontario, in such a case you may not be eligible for income replacement options and other benefits.

You may also be not able to sue the other at-fault driver for any kind of benefit. In fact, if you are at-fault for the accident, then you are held responsible for all damages and losses as you have no insurance. There are various types of insurance to suit the needs of different types of requirements.

Personal Injury Protection (PIP)

Any person injured in an accident would know the importance of having Personal Injury Protection coverage. It does help to pay off the expenses that you incurred for any treatment to recover from the injury and other costs. Any financial loss due to no income can be claimed. The maximum amount claimed could be up to 80% of net income loss before the trial and 100% of potential gross income after trial. You may also claim for health care expenses if you have suffered from serious deformity. Or damage to any physical, psychological or mental functions.

If you are seriously injured in an accident that has caused suffering and pain that meets the stipulated ‘verbal threshold’ then this is a loss considered as not economic. This might mean death or serious permanent deformity. The family of the injured could also sue for loss of support and companionship under the Family Law Act. Any accident or disability benefits would be deducted from the final settlement of the personal injury claim.

Liability Coverage

If you drive in Ontario, it is mandatory to carry a third party liability coverage for at least $200,000 on your auto insurance policy. This will help to recover losses if anyone else is injured or killed. Or if there is property damage it can be covered too. Lawsuits are expensive and you may be covered for legal expenses up to the coverage limit. The liability coverage could also be increased if you wish to have higher limits. This would depend on how much more insurance premiums you could afford to pay and your requirement. It will help to recover huge financial losses in the event of a court case.

Usage-Based Insurance

This kind of insurance is based on a monitoring telematics device on your vehicle to check your driving habits. Your driving skills are checked in terms of turns, braking, speed, cornering and the timing and frequency on the roads. Having this device also makes you more alert and careful while driving. This prevents collisions and traffic violations to a great extent. In case you have safe driving habits as per the telematics device you are at an advantage. Your insurance company may provide you a good deal. On an average, the drivers who perform well with telematics monitoring do enjoy up to 20% discounts from insurance companies.  A positive aspect is that if you are a driver with unsafe driving habits then this program cannot be used to penalize you if you drive in Ontario.

Ride-Sharing Insurance

Ride sharing is a service that connects drivers with passengers who are willing to pay for the ride. The most popular mobile app used for this service is Uber App. As per FSCO, a personal standard auto policy does provide cover from the time the Uber app is started to the time the passenger is dropped off. It is necessary that the Uber app is turned on for this coverage to be applicable. The Uber app also supports an image of the updated insurance card that could be provided when asked by traffic police. Other than Uber there may be other platforms used as well. In any case, it is important to inform your insurance company if you transport passengers in return for payment.

Comprehensive Coverage

This is an optional auto insurance coverage in Ontario. This coverage will help to recover losses in case of damage or accident. The claim could be settled for up to the actual cash value in case the damage was due to sudden perils. Such as theft or attempted theft, any flying objects, natural calamities such as flood, vandalism or riots etc. Under this coverage, you could claim for damages not caused by another motorist. This coverage is to provide insurance protection to only the vehicle, not the driver or passengers. The standard deductible applied on a comprehensive coverage is $500. So, it may not be really worth to have this coverage for an old car that costs just $1000 or less.

Full Coverage

There is no single coverage that could be termed as ‘full coverage’ in Ontario. However, you may choose to have many levels of protection to have your car fully protected in case of an event. In layman terms if you got the standard and some optional coverage you could be considered as having full coverage.

That means if you have purchased liability, uninsured, collision, comprehensive and medical coverage you pretty much have full coverage. So you may be covered for the following:

  • The medical expenses of your passenger and self, if you are at-fault, could be covered up to the limit in your medical coverage.
  • Any damage that you may cause to others may be covered up till your liability coverage limit.
  • Any losses to your car if damaged in a collision when you are at-fault may be covered. Or a natural disaster or theft loss could also be claimed for the fair market value of the car less any deductibles.
  • In case you are hit by an uninsured driver then any injuries to you or your passengers could be covered under the uninsured coverage.

Basic Coverage

If you are a motorist in Ontario then it is mandatory to purchase the basic coverage such as third party liability, statutory accident benefits, and direct compensation-property damage (DC-PD).  Third party liability would cover up to $200,000 which is the required minimum limit. This coverage covers losses in case you damage property, injure or kill someone else. Any lawsuits and claims made against you could be covered by the third party liability coverage.

In case you are involved in an accident and are injured, the statutory accident benefits would help you claim for the losses. It does not matter who is at-fault for the accident. You may claim for any medical, rehabilitative, attentive care, income replacement expenses etc.

If someone else is at fault for the accident then you may claim under the DC-PD coverage. You may claim for damage to the vehicle, the contents and for any loss of use of your car and its contents.

In order to claim under DC-PD coverage it is vital to meet the following 3 rules:

  1. The accident must take place in Ontario.
  2. The accident must involve at least one more vehicle.
  3. This other car involved in the accident must also be insured by an Ontario licensed insurance company. Or an insurance company must have an agreement with FSCO to provide DC-PD coverage.

Uninsured/Underinsured Motorist Coverage

This coverage comes handy when you are involved in an accident and the other party has no insurance or not enough coverage. This can be claimed even when the other party who is uninsured is at-fault. In Ontario, the OPCF 44R is an optional coverage that could provide protection up to the same limit as third party liability for any damages. These damages may be caused by someone with no insurance, had no sufficient coverage or is unidentified.

Collision Coverage

This is an optional coverage and is also known as ‘upset coverage’. You may need this coverage if you are involved in a collision with another object which could also be a car. Or your car rolls over due to the impact of the collision. This other object may be on the ground, in the ground or attached to the car. Any losses due to such a collision will be covered up to the limit specified for the coverage.

No-Fault Insurance

In Ontario, the insurance system works on a no-fault basis. This means that it does not matter who is at fault for the damage. Your insurance company may cover the losses if your car is damaged or you suffer injury due to an accident. It is not required to follow up with the other at-fault driver’s insurance company to compensate for the losses. The fault determination rules of the insurance company assess up to what extent each driver is at fault for the accident. Accordingly, the claim amount is settled.

Gap Insurance

Guaranteed Auto Protection or Gap insurance helps to bridge the void that is not covered by your auto insurance policy. The gap in value starts the moment you drive your car off the lot. It is the difference in amount between the actual market value of the car and the remainder of the amount you owe to the financing or leasing company. This coverage is ideal for new and used vehicles with more value. Certain policies also have deductibles covered by Gap insurance.


Resources:

http://www.fsco.gov.on.ca/en/auto/pages/ridesharing-info.aspx

http://www.rbcinsurance.com/car-insurance/collision-comprehensive.html

http://www.melochemonnex.com/en/car-insurance/articles/car_insurance_Ontario_nofault